Market Rally Unsustainable?
Looking back at the financial crisis, it took 3+ years for the market to return to pre-crisis levels. How unsustainable is this rally?
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Past experience would dictate that this is a bear market rally, but nobody really knows what’s going on. The huge drop happened because people feared economic contraction. When the drop happened, we had no real reason to fear (we didn’t know how much of an impact the virus would have, so this bear market wasn’t indicative of actual economic contraction).
The market is rallying because people are realizing that the drop was insane for no reason. They believe that the market wasn’t hit as hard as we originally thought, so investors are hoping to make money from the huge upswing.
My personal opinion is that the impact on the economy will be much worse than we had thought when the market originally dropped, so we have more time before reaching a true bottom. I think that in a few months, the market will be more indicative of economic health than it currently is. Right now, it’s all sentiment and expectation because we don’t know the actual impact on economic health.
and when do u think markets gonna go back down?
If I knew that, I'd quickly become a millionaire. Nobody knows; we also don't know how bad it's going to get. Look at Boeing: Boeing is one of the largest airplane manufacturers in the world (along with Airbus) and they're talking with IBs to try to get private funding. If a company like this suddenly goes under, the economy will totally tank from sentiment + other ripple effects. It could happen at any time, or it could potentially not happen at all.
When people get a grip and find out the full extent of the impact, it'll go down, then start going back up (slowly or quickly? No telling, but probably slowly). Mark Hulbert put a great opinion piece on this on MarketWatch last week - he thinks we'll hit the new "low" in August. I'd highly recommend checking it out, it's got some good info on past situations. The real problem is that this is a completely new situation that we haven't seen before, what with the oil price collapse RIGHT at the wrong time (Saudi Arabia is now struggling from the choice they made to try to hurt others), a pandemic that we've never seen spread so quickly, the US government swooping in automatically to bolster the economy... there's no way to know for sure what'll happen.
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